Correlation Between Central Pacific and Citizens Financial
Can any of the company-specific risk be diversified away by investing in both Central Pacific and Citizens Financial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Central Pacific and Citizens Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Pacific Financial and Citizens Financial Corp, you can compare the effects of market volatilities on Central Pacific and Citizens Financial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Central Pacific with a short position of Citizens Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Pacific and Citizens Financial.
Diversification Opportunities for Central Pacific and Citizens Financial
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Central and Citizens is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Central Pacific Financial and Citizens Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Financial Corp and Central Pacific is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Central Pacific Financial are associated (or correlated) with Citizens Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Financial Corp has no effect on the direction of Central Pacific i.e., Central Pacific and Citizens Financial go up and down completely randomly.
Pair Corralation between Central Pacific and Citizens Financial
Considering the 90-day investment horizon Central Pacific Financial is expected to generate 2.11 times more return on investment than Citizens Financial. However, Central Pacific is 2.11 times more volatile than Citizens Financial Corp. It trades about 0.27 of its potential returns per unit of risk. Citizens Financial Corp is currently generating about 0.31 per unit of risk. If you would invest 2,665 in Central Pacific Financial on September 3, 2024 and sell it today you would earn a total of 527.00 from holding Central Pacific Financial or generate 19.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Pacific Financial vs. Citizens Financial Corp
Performance |
| Timeline |
| Central Pacific Financial |
| Citizens Financial Corp |
Central Pacific and Citizens Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Pacific and Citizens Financial
The main advantage of trading using opposite Central Pacific and Citizens Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Pacific position performs unexpectedly, Citizens Financial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Citizens Financial will offset losses from the drop in Citizens Financial's long position.| Central Pacific vs. Bank of Hawaii | Central Pacific vs. Territorial Bancorp | Central Pacific vs. First Bancorp | Central Pacific vs. Hancock Whitney Corp |
| Citizens Financial vs. First Hawaiian | Citizens Financial vs. Central Pacific Financial | Citizens Financial vs. Territorial Bancorp | Citizens Financial vs. Comerica |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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